Wells Fargo said today it expects a record net profit of $3 billion in the first quarter. That’s despite net charge offs, or ultimate losses on loans, of $3.3 billion, down from $6.1 billion in Q4, including losses from buying Wachovia.

And the record profit accounts for the bank setting aside $4.6 billion for future loan losses, bringing its total loss reserve to $23 billion.

As a reminder, Wells has received $25 billion as part of the federal bailout of the banking industry.

This is certainly good news for Wells and the banking industry. But I’d like to see a few more quarters of strong results before declaring Wells as out of the woods. The company officially reports first-quarter earnings on April 22.

Update: Wells said its net interest margin hit 4.1% in the quarter, which strikes me as extremely high. Clearly, its borrowing costs are low, very low, thanks in large part to the Federal Reserve’s cutting of interest rates and tepid global demand for goods and services, which has halted inflation. In an interview on CNBC, CFO Atkins said higher cost deposits of Wachovia are maturing, which implies Wells is getting those borrowers into lower cost CDs. A world in which savers get very little return on their money is great for banks.